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Railroads and the Public 


AN ADDRESS 

DELIVERED BEFORE THE 

Contemporary Club of Philadelphia 


By JOSEPH D. POTTS 

MEMBER OF THE AMERICAN SOCIETY OF CIVIL ENGINEERS, AND OF THE 
AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE 


January 12, 1892 


REPRINTED MAY 19th, 1911'. 

Nineteen ( 19 ) years ago Col. Joseph D. Potts, an eminent Engineer 
and a widely recognized authority in matters relating to Transportation, 
uttered a truth the vital importance of which was at that time only 
vaguely understood or appreciated. (See page 6 .) 

“WE MUST HAVE A SEPARATION 
OF TERMINAL AND TRANSFER 

charges— FROM THE ROAD 
CHARGES.” 

Today this truth is beginning to be recognized as fundamental. 

Road cost, that is, the cost of Transporting Merchandise between 
Terminals, is comparatively uniform. Terminal and Transfer costs or 
allowances are often heavy, and vary greatly according to the natural or 
artificial advantages or disadvantages of different localities. 

The logical conclusion is, that the charge for Transportation should 
be based on the comparatively uniform “road cost” plus the actual 
“ Terminal and / or Transfer costs ,” pertaining to the particular points of 
Origin and Destination. 

No locality or individual should be deprived of the benefit of its or 
his natural or acquired advantages, in order that the disadvantages of 
another locality or individual may be neutralized. 














« < 


« . « 



Railroads and the Public 


AN ADDRESS 

DELIVERED BEFORE THE 


Contemporary Club of Philadelphia 


By JOSEPH D. POTTS 

MEMBER OF THE AMERICAN SOCIETY OF CIVIL ENGINEERS, AND OF THE 
AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE 


JANUARY 12, 1892 


PHILADELPHIA: 

* 

PRESS OF DANDC COMPANY 

ti * 

1911 'O 











W EXCHANGE 



Mr. President, and Ladies and Gentlemen: 

The question of Transportation, a certain phase of which 
you have just heard discussed, is one of the weightiest of 
living topics. It has grown more rapidly than it has been 
comprehended; and the commercial health of the Nation 
requires that this condition be changed; that its essential 
principles be broadly understood, and the proper regulation of 
its great power be intelligently, justly, and completely estab¬ 
lished. 

I hope you will not consider it unfitting if I refer, by way 
of a short prelude, to what may be deemed the Genesis of 
Transportation; to the imperative character of the instincts it 
has been created to gratify; instincts which have grown, and 
which will continue to grow in volume and force, as means 
for their gratification increase in extent, in excellence, and in 
cheapness. 

The impulse to movement, to motion, to change of local¬ 
ity, seems inherent in all matter. The great spheres which 
occupy space are forever moving; the infinitesimal atoms of 
which matter consists are never quiet, excepting under re¬ 
straint. Animal life has its recurring periods of restlessness, 
and the human animal, man, is dominated by the same irre¬ 
sistible law. Only the restraints of inconvenience, lack of 
physical power, and lack of time keep mankind within reason¬ 
able bounds of quietude. The possession of money in modern 
times somewhat lessens the force of these restraints, and the 
palpable results of such possession has led an acute observer 
to say that “when a rich American has built himself a house 
in the city, another in the country, and a cottage by the sea 
or in the mountains,—then—he travels.” The motives to 


movement are multitudinous; to movements of persons, of 
property, of ideas; motives of pleasure, of sorrow, and of 
gain; the supply and reception of news, and the demand and 
supply for and of materials for use and gratification. These 
motives are endless in quantity and variety, but they are all 
in constant activity; and they all impel and compel movement. 

The palliation and the partial removal of the forms of re¬ 
straint just named, which so hamper these ever-present im¬ 
pulses to movement, has become in modern days one of the 
greatest of human industries. It is the Science and the Art 
of Transportation. 

Let us glance briefly at some of the achievements of this 
immense industry. Instead of the rugged and broken natural 
surface of the earth, to be wearily and slowly plodded over 
on foot, in danger, with exhausting toil, with great loss of 
useful time, and with the most barbaric discomfort, we have 
the smooth railway and the vestibule train, and we eat and 
sleep in luxury, comfort, and safety, while gliding easily along 
at fifty miles an hour. The great water surfaces of the globe, 
upon which in his early history man could not safely venture, 
are now traversed in huge vessels, safely, comfortably, and 
swiftly, and with such certain punctuality, that spaces of 
thousands of miles are covered with variations of but a few 
hours in the times of the voyages; and, indeed, under favor¬ 
ing conditions of sea and weather, these differences are meas¬ 
ured by minutes. 

Our ideas are passed from point to point with still greater 
perfection of method. The telegraph, the telephone, and the 
extraordinary postal systems of civilized countries, especially 
that of the United States, make the interchange of ideas rapid 
and cheap to a degree which but a short time since would have 
appeared impossible, unless it had been wrought miraculously. 

If we turn from what has been done in the way of remov¬ 
ing restraints on the movement of man and his belongings, to 
the effect which such partial removals have worked, we will 
find the most abundant confirmation of the declaration already 
made, that this tendency is constant and all-pervading, and 


3 


that nothing but natural hindrances prevent its increasing 
conversion from tendency to deed. 

Bear in mind that Transporters have not wholly removed 
difficulties; they have only modified some of them, and this, 
in part, by converting them into a new form of difficulty; the 
new form being a charge of money. Instead of spending 
time and strength in tramping from place to place, the traveler 
buys a ticket, for which he disburses money; instead of carry¬ 
ing his goods on his back through the wilderness, he pays a 
freight rate, and for the sending of his letters three thousand 
miles, he uses a stamp which costs him two cents. 

He can earn the requisite cash for the ticket, for the freight 
rate, and for the stamp, with much less outlay of time and of 
labor than was required, when, by his own efforts, his person 
or his property was moved; so that, while his movement is 
still under restraint, still subject to whatever difficulties may 
be represented by the rates of charge and the conditions made 
by Transporters, his restraint has been greatly lessened, and 
the extent of movement has, therefore, been greatly enlarged. 

I don’t wish to worry you with statistics, but I will ven¬ 
ture to give you a few figures, because in no other way can you 
be so briefly shown how increases in movement have followed 
the physical improvements and the lessened cost already es¬ 
tablished by Transporters. 

Take an example from the movement of property:— 


On the railroads of the United States the aver¬ 
age charge for moving one ton of property, one 
mile, was— 

In 1880 . I ToV cents 

In 1890 . cent 

The tons moved one mile per each person of the 
entire population of the United States were— 

In 1880 . 645 

In 1890 .. 1265 

That is, the reduction in rates was a little more than one- 
fourth per ton, while the increase in movement, per person, 
was nearly doubled. 






4 


Take an example from the movement of letters:— 
The rate of letter postage charged by the United 


States was— 

In 1880, for a half ounce or less. 3 cents 

In 1890, for an ounce or less. 2 cents 


The movement of letters through the mails dur¬ 
ing the same years, for each person of the en¬ 


tire population, was— 

In 1880, approximately . 21 

In 1890, approximately . 30 


Disregarding the effect of the change in maximum weight, 
as an effect, the extent of which cannot now be ascertained, 
we find the result to be a deduction in charges of one-third 
per letter, and an increase in movement of nearly one-half 
per person. 

All hindrances to movement, however, are not yet repre¬ 
sented by a charge. Some loss of time is yet involved, and in 
the cases of long journeys, very much time, which often can 
be illy spared. Our practical speed, however, is yet slow ,* 
not over fifty miles per hour, and betterments in this respect 
can be reasonably hoped for. It is much slower than certain 
varieties of birds are said to have attained, and, what birds 
have done, man can probably do. Some bodily wear and tear 
is yet a necessity, and this may never be wholly removed, but it 
is certainly lessened yearly. 

The chief hindrances of today are represented in part by 
the tariff conditions of Transporters, and by their rates of 
charge; especially by the irregularities and discriminations of 
such rates, and by their sudden and severe fluctuations. They 
are also represented, in part, by suddenly developed incom¬ 
petencies of Transporters to meet sudden growths of move¬ 
ment ; or to meet promptly, clearly foreseen increases in 
demands for track, power, and carriage facilities. And they 
are finally also represented, to a large extent, by the evil re¬ 
sults of many unwisely conducted struggles for traffic, and for 
monopoly of position, which are waged between railway cor- 






5 


porations, and which, by a curiously weak misnomer, are classi¬ 
fied under the title of Competition. 

It is to a consideration of some of these existing obstacles, 
which bar our way to more effective transportation condi¬ 
tions, that I will now ask your attention. 

Perhaps our perception of the evils we suffer from, and of 
the possible remedies for them, may be quickened and clari¬ 
fied by first making plain to our minds, what conditions of 
transportation capacities we would like to have—what con¬ 
ditions, which, in the light of present knowledge, will proba¬ 
bly be improvements on those we now possess, and yet not 
be beyond a reasonable hope of practical attainment. To set 
forth these new and desirable conditions with any approach 
to adequate fullness, I have found to be quite impossible 
within the limits of time permitted by a proper regard for 
your patience. I can therefore but hint at a few of their out¬ 
lines; and, indeed, I have been obliged to restrict these hints 
to the subject of property movement only, and that by rail¬ 
way within the United States. 

First, then, we must have reasonable rates of charge, and 
reasonable stability in such rates, so that the great interchanges 
of traffic will 'not have possible ruin always impending over 
their owners, through sudden and violent changes in tariffs. 
Today all traffic is so exposed, and many severe and costly 
demonstrations of this truth have made the boldest commer¬ 
cial minds, timid and halting in their movements, excepting 
when they can procure, in advance, and from, competent 
authority, assurances against such risks. Communities which 
possess two or more really competitive routes, equally effect¬ 
ive and far-reaching, are less exposed to this danger than 
others. It is indeed a frequent practice for a Transporter to 
maintain high charges to or from points which no other Trans¬ 
porter can reach, while making low rates to and from other 
points which are in competition with rivals. There are few 
practices more tempting to the Transporter, but none more 
ill-judged, nor more permanently harmful to both Transporter 


6 


and locality. It is an abominable evil which should be abso¬ 
lutely suppressed. 

Stability must be attained, however, by means that will not 
stifle improvement. Destructive competition has, as its one 
good effect, the betterment an^l cheapening of methods; but 
surely our civilization is not at this day so crude that progress 
in method cannot be won in better ways than by the destruc¬ 
tiveness of the savage. 

Next: we must have a greater approximation to uniformity 
in rates of charge, and absolute freedom from inequitable 
discrimination between shippers. The big shippers must not be 
charged so much less than the little shippers, that the little 
ones shall perish and the big ones find their business increas¬ 
ingly swollen. It is proper and necessary to have a wholesale 
rate and a retail rate of charge; but the basis of the wholesale 
rate must, both for the public benefit and the interest of the 
Transporters, be small enough to be attained by the many, 
and not so large that it can only be reached by the few. 

AGAIN: WE MUST HAVE A SEPARATION OF 
TERMINAL AND TRANSFER CHARGES FROM 
THE ROAD CHARGES. Terminals and transfer facili¬ 
ties are costly, and their expenses cannot be easily cheapened. 
The great future economies will be made in the movement 
between terminals, and it is this movement which the individual 
members of the public cannot provide cheaply, each for him¬ 
self. It is here that the main usefulness of the great Trans¬ 
porter is found. Many shippers prefer to provide their own 
terminals and do their own terminal work. When they can do 
so they should have the right to do so, and they should not 
be charged for what they do themselves. 

Again: we must have a separation of road charges into 
charges of a certain amount when cars are furnished by the 
road owner, and charges of a less amount when cars are fur¬ 
nished by others. Many prefer to furnish their own cars, and 
should be allowed to do so, and such division of the total 
road charges should be made as will fairly apportion them 
according to the relative capital and risk of each interest. This 
should apply, whether the car-owner carries traffic for himself 


7 


or for others. Under this regulation, shortage in car supplies 
will become less frequent, and the railway will approximate 
the character of a Common Highway; a result much to be 
desired. 

Again: we must have, within defined limits, a practical 
blending, for the movement of cars and property, of all the 
railroads of the country, as they are now, and as they may 
be hereafter, into a single effective system. That is, the rates 
of road charges should be on a mileage basis, and should 
apply to the total mileage any shipment may make, regardless 
of the fact that it may, in its transit, pass over many roads 
differently owned. This will be easily accomplished if the 
divisions of the road charges already suggested be made, and 
if every road be compelled to move, with impartial prompt¬ 
ness, over its tracks (but not into its terminals) every suitable 
car which may be offered to it. 

Proper rules as to such interchange of cars, including also 
just requirements as to the character of the cars, should, of 
course, be established. 

Again: railroad owners, as one of their duties, should be 
under compulsion to be suitably supplied with tracks and 
power. This is a question of difficulty, and ought not to be 
adjusted inequitably; but it should not be left, as it now is, 
wholly to the degree of providence or foresight, financial skill 
or commercial courage, possessed by each such road owner. 

These leading changes impress me as absolutely essential 
to be made, and made as speedily as may be consistent with 
equity, legal power, practicability, and good judgment. They 
will constitute, I believe, a set of fairly effective remedies for 
the main imperfections yet developed of our present system 
of Inland Traffic Movement. There are, of course, other 
difficulties needing cure, including difficulties local to cities 
and to all closely settled communities, which I cannot touch 
on now. 

If what I have said be correct, we have then to consider 
the equities involved in these changes; afterward the legal 
power to make them; and, finally, the practical method, if any 
can be found, of accomplishing them. 


8 


And first, what equities are to be considered? I take it 
no American, in his moments of sober thought, will feel that 
/ any readjustments of conditions can stand, or ought to stand, 
or will produce permanently useful results, unless they be 
founded on equity. 

When, early in this century, the movement began among 
civilized nations, looking to inland transportation upon a scale 
beyond all precedent, each large community turned naturally 
to its governments, Municipal, Provincial, State or National, as 
the only available organizations competent to provide for a 
common need; the cost and apparent risk of which were so 
much beyond the range of individual power. Moreover, the 
idea of a Common Highway was properly a dominant one. 
Hence States built canals and railways and, later, lesser com¬ 
munities jbined interests with individuals in constructing like 
works. The National Government of the United States built 
a great macadamized road. European governments embarked 
largely in the improved form of highways. Certain disadvan¬ 
tages in many cases were soon developed under governmental 
ownership and operation. Political necessities often took 
precedence of commercial necessities, and the governmental 
management became frequently incompetent and tainted. 

Most communities in this country grew satisfied that the 
element of individual interest must be introduced to secure 
transportation efficiency and avoid governmental deteriora¬ 
tion. The introduction of such an interest soon became, with 
a few exceptions, the general rule here, and forms of corporate 
organization were evolved, in which, under restrictions for 
the public protection thought at the time to be sufficient, but 
which have often since proved inadequate, the private interest 
of the Transporter became the leading motive and the con¬ 
venience and interest of the public, subordinate considerations; 
excepting when and as it became clear to the Transporter that 
deference to the latter motives would contribute to his own 
prosperity. 

Vast amounts of individual money have been invested in this 
form of public service, under the belief that this relation of 
interests would always continue. 


9 


It would be unfair to sacrifice to any improper degree these 
individual interests, thus authoritatively called into existence; 
but the time seems to have arrived when, through the processes 
here suggested, or such other processes as may seem to be 
wiser, but in any case by processes which shall be mutually 
just, the public service must take the front place as a motive, 
and the private interest of the Transporter an equitable, but a 
secondary, position. 

The next point, that of legal power, is one which I think 
need hardly be considered at present. Under our form of gov¬ 
ernment, whatever a sufficient number of the people ultimately, 
and after full consideration, decide shall become the law will 
be made the law, and the present moment is the time for dis¬ 
cussion and for experimenting, and not for much law-making. 
We therefore come, finally, to the consideration of methods of 
reformation. 

Railroad owners are clearly unable to introduce such meth¬ 
ods unaided. They have tried to harmonize in various ways 
ever since the dawn of competition among them, and their 
efforts have been but a continuous succession of short-lived 
pacifications, alternated with longer periods of mutual re¬ 
proaches, impartially distributed breaches of faith, and bitter 
and destructive rate’ wars, track wars, and wars over every 
other species of difference between them. The public look 
with disfavor upon peace conferences between railroad com¬ 
panies, and in fact have now made Pooling unlawful. The 
Pool was perhaps the most nearly successful form of traffic 
combination on a great scale ever made in this country; but it 
was only imperfectly maintained, and when its provisions 
seriously pinched the prosperity of any member, the Pool was 
only preserved, because those members whose interests it was 
aiding, winked at the secret remedial methods resorted to by 
the member whose interests it was harming. 

The public disfavor would not have been unwise had the 
Pool been perfect. Such a huge combination of almost un¬ 
checked power over the fortunes of citizens would have 
certainly been unwholesome, and might easily have grown 


IO 


dangerous. But the natural existing conditions make Pool¬ 
ing substantially harmless at present, and its illegality is, 
therefore, at this time a needless safeguard. 

The separate States are clearly incompetent to establish 
efficient regulations. Their jurisdiction is limited to their own 
boundaries, while the controlling traffic is Continental. 

There is but one power which can deal with the subject 
effectively, and that is the Government of the United States.- 
This power has made a movement in this direction by enact¬ 
ing, and, to some extent, enforcing, the Interstate Commerce 
Law. The movement has been useful, but less so than was 
hoped for. It has cured something, and has probably tended 
to prevent more harm than it has discovered or punished. 
The commission created under it has labored under a radical 
disadvantage in not having among its members either trained 
transporters or capable merchants or manufacturers, and of 
being loaded with duties which entirely overtax a single tribu¬ 
nal. If it was confined to the duty of interpretation, ancl if 
the duty of enforcement was divided among a number of other 
tribunals, the results should be better. The power it claims, 
of determining absolutely the rates of charge, is a dangerous 
power, which Transporters are naturally contesting, and which, 
if it exists, should doubtless be modified. 

The precise relation which the National Government should 
adopt toward this question is very uncertain in the public mind. 
Government ownership and operation is urged, but I think 
this view is not held by those who have carefully studied the 
subject. Such a course is open at present to many objections, 
some of which seem vital. 

Probably the wisest relation it can now establish is that of 
a Controlling Regulator. Tariffs of charge and tariff condi¬ 
tions cannot be made with good judgment, excepting by trained 
experts, and such experts are to be found almost wholly 
engaged in performing the active duties of Transporters; 
therefore such tariffs should be primarily framed by the Trans¬ 
porters themselves. 

Railroad owners can be forced by suitable National legis- 


lation to wholly forego participation in foreign or interstate 
business, unless they unite in certain prescribed relations. 

These relations should comprise proper regulations and 
agreements for the proper conduct of all their business, and 
proper tariff conditions and rates of charge; all upon the 
bases finally determined upon. Such agreements, after formu¬ 
lation, should be subject to the judgment of a National Tribu¬ 
nal composed of capable lawyers, transporters, and shippers. 
In cases of irreconcilable differences between that Tribunal 
and the Transporters, such differences should be controllingly 
passed on by the Supreme Court of the Nation. Variations 
in form or essence from such rates and regulations while in 
force should be punishable by heavy penalties, both corporate 
and individual; and the detection of such offenses and their 
punishment should be done at the National cost, and before 
any one of a sufficient number of National courts to insure 
convenience and prompt results. A few important convic¬ 
tions and punishments would probably make the subsequent 
legal business of this sort quite limited in quantity. Changes 
in either rates or rules thus established should be made only 
by the same authorities and through the same formal pro¬ 
cesses as the originals. 

These suggestions, and perhaps all suggestions having sim¬ 
ilar purposes, will hardly commend themselves to the existing 
railway owner. No curtailment of privilege or power ever 
seemed wise at first to him who suffered such loss. But it 
should not be forgotten that this power is in the aggregate 
greater over the fortunes of the people than any ever before 
possessed, even by governments in times of peace, if the gov¬ 
ernments were free. The people of several of our States have 
already grown so restless under the existence of this power 
and some of its evil results that laws bearing a painful lean¬ 
ing toward confiscation have been enacted. Such laws of 
course hurt both sides, as all inequitable action always does; 
but they have been made, and will probably have worse suc¬ 
cessors, unless enlightened and competent remedies, consistent 
with peace, be established. 

But I must close. The subject is illimitable, and does not 
easily adjust itself to condensation. 

Permit me to thank you heartily for your patient attention 
to a topic which is so much more technical than dramatic. 



# 




% 


TRANSPORTATION 

Extract from the address of Col. Joseph 
D. Potts before the Contemporary Club of 
Philadelphia, January 12, 1892! 

AS PERTINENT TODAY AS IT 
WAS NINETEEN YEARS AGO 


“The question of Transportation, a certain phase of 
44 which you have just heard discussed, is one of the 
44 weightiest of living topics. It has grown more rapidly 
“ than it has been comprehended; and the commercial 
“ health of the Nation requires that this condition be 
“changed; that its essential principles be broadly 
44 understood, and the proper regulation of its power be 
44 intelligently, justly and completely established.” 


HI56 74 577 











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